Sibanthracite seeks out new investors ahead of $855m IPO

Michael Bow is a reporter at City A.M. covering private equity, funds, investments and asset managers. He can be reached on michael.bow@cityam.com

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Michael Bow

RUSSIAN coal miner Sibanthracite will kick off an investor roadshow in London today to convince potential backers to buy into plans for a market float of the business.

Man Group’s GLG Emerging Markets Growth Fund, which owns a quarter of the company, is selling off its entire holding in Sibanthracite in an initial public offering.

The offering, set at between $7 and $9.50 per global depositary receipt, would give the company a potential market cap between $630m and $855m (£561.8m).

The company, which would raise up to $210m from the float if it was priced at the upper range, controls about 15 per cent of the market in anthracite, which is a type of very fine coal used in the steel making industry.

Around 20 per cent of the shares on offer are being held back and offered to pre-existing investors in the GLG fund. The company’s main shareholder. Alltech Group, will retain about a 75 per cent stake and has agreed not the sell any shares.

JP Morgan, Morgan Stanley, Raiffeisen Bank International and Sberbank are acting as joint bookrunners on the deal.

“Sibanthracite is a leading provider of a premium product to a global market in which demand significantly outstrips supply,” chief executive Dmitry Shatokhin said.

However, the float of an emerging market mining company comes at a precarious time for the sector.

London listed mining company shares have plummeted in price since the start of the year and coal prices have also dropped close to their lowest since 2009.

Sibanthracite owns mines in Siberia and last year said it produced four million tonnes of anthracite, with profits of $117m on revenues of just over $500m.

Sibanthracite plans to expand its production by 125 per cent through to 2017, according to research by Sberbank. The bank said the company was well positioned “to withstand the coal market turmoil,” according to the Sberbank research note which was first reported by Reuters.